What Exactly is "Financial Need"?

Financial need sets the maximum amount of need-based federal financial aid you can get. It’s calculated using this formula:

   Cost of Attendance
Expected family contribution
= Financial need

Cost of Attendance (COA) is the school’s estimate of the annual educational costs that you and your family will incur if you attend. This figure varies from school to school and depends on a large number of factors, mostly the following:

  • Tuition and fees
  • Room and board
  • Books and supplies
  • Transportation
  • Miscellaneous personal expenses

Note that the COA often includes both costs that are paid directly to the school (like tuition) and costs that aren’t (like transportation).

Expected Family Contribution (EFC) is an estimate of the amount of resources your family has available to help meet your entire COA. It’s based on your Free Application for Federal Student Aid (FAFSA), and it’s generally consistent from school to school. You can estimate your EFC by using calculators such as the FAFSA4caster.

Some schools collect more detailed family information via the College Scholarship Service (CSS) Profile. The result may be a higher EFC that they’ll use to determine your eligibility for nonfederal aid. Contact your financial aid office for more information.

Your financial need will differ from one school to the next because each school’s COA differs. A higher COA and lower EFC generally will increase your financial need and your eligibility for need-based financial aid. Remember: Financial need is the maximum need-based aid you can receive—other variables, such as the amount of funding the school has and the types of financial aid you’re willing to consider, can affect whether you’ll reach that maximum.

Student aid programs that aren’t based on financial need—including Direct Unsubsidized Loans and PLUS Loans—use this formula:

   Cost of Attendance
Expected financial aid (including need-based aid)
= Remaining eligibility for non-need-based aid

You will need to complete the FAFSA to receive most forms of non-need-based financial aid.

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